Agencies vie for high-tech companies - Westfair Communications

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For companies seeking to relocate, the Hudson Valley offers abundant office and warehouse space, industrial facilities and green space for development. But in terms of what firms are looking for, the single most important resource is the always-sought good, smart worker.

“The primary thing is talent,” said Anthony Campagiorni, president and CEO of the Tarrytown-based Hudson Valley Economic Development Corp. (HVEDC). “If you can”™t get good workers in a place, you can”™t do business there.” Just look at New York City, which continues to draw firms from all over the world despite office space leasing for the exorbitant rate of $100 per square foot or more. Companies are willing to pay because of the high-quality work force.”

The Hudson Valley”™s high cost of housing and migration of young adults from the area are worrisome trends, Campagiorni said. “You have to offer young people opportunities for good and enticing employment that has an upside potential, and you need to have appropriate housing.”

Campagiorni said about one-fifth of the work force commutes out of the area every day, a big disadvantage. “Exporting our smartest and brightest people is a disinvestment in the region in all ways,” he said. “It has a terrible effect on the community.” People spending up to four hours a day commuting don”™t have time to volunteer and are spending a lot of money elsewhere.”

The high number of commuters also presents Campagiorni”™s organization with a technical problem, particularly in its efforts to lure more financial services and insurance firms to the area: While there are many skilled workers in those sectors living in the Hudson Valley, it doesn”™t show up in the U.S. Department of Labor data. Instead they are counted in the data for New York City, since those workers are commuting. Campagiorni said no matter how much his office explains the situation to prospective clients, they still are going to rely on the statistics. “If you”™re making a multimillion-dollar decision (about relocating), at the end of the day you want to see the data.”

Despite the high rental prices of commercial real estate in New York City, companies haven”™t been moving north the way one would expect, even though office space in Westchester County leases for $30 per square foot and in Fishkill for $20 per square foot, Campagiorni said.

His group oversees a total 12 million square feet of inventory scattered across the nine counties of the Hudson Valley ”“ a mix of warehouses, offices and manufacturing facilities. Westchester has 90 percent of the office space, much of it concentrated in a five-mile corridor between White Plains and Rye Brook. Four million square feet of warehouse space is squeezed between Montgomery and Middletown in Orange County, while the prime industrial properties are two gigantic former IBM facilities: the Hudson Valley Technology Campus (HVTC) in East Fishkill and TechCity in the town of Ulster.

Campagiorni said his firm focuses on the bigger companies, those seeking 50,000 square feet or more, or those looking to develop greenfields of 5 acres or more that are ready to go (i.e., the land has gone through the local review process and been zoned appropriately, so development can occur quickly). Currently, he said most leads are from midsized manufacturing and research-and-development companies with a concentration in the biomedical field. The majority are based in New Jersey, Connecticut and Pennsylvania, with an occasional request coming from the West Coast or Texas. Most of the interested firms are looking to expand or consolidate, and some have a research partner or large customer base in New York City.

Campagiorno said he”™d like to work with more institutional investment firms, such as real estate investment trusts, which have tenants scattered across the country. “They could help us attract a more diversified group” through their expansive customer base, he said.

An example is Panattoni, a national commercial real estate developer that just purchased a 600,000-square-foot building in the town of Wallkill that was a former distribution center for Shopright. “They are lead generators,” said Maureen Halahan, president and CEO of the Orange County Partnership, a not-for-profit private economic development organization. “While brokers are still valuable, the trend has changed. Commercial developers with deep pockets are connected and can bring in other projects.”

Halahan said another major project in the county is a new, 76,000-square-foot manufacturing facilityÂ producing aircraft turbine components, which is a joint venture of Pratt & Whitney, Advanced Coating Technologies, which was recently acquired by Pratt & Whitney, and Chromalloy. The precision coating used on the components requires the skills of a highly trained work force, which was one of the draws of Orange County, she said.

Halahan said the county gets a steady stream of firms priced out of northern New Jersey. They are attracted not only by the lower costs of Orange County but also its mix of open space and warehouse facilities; three cities, which supply a steady work force; and the proximity of Stewart Airport and three interstate highways.

The main hurdle is New York”™s high property taxes, although companies bringing in significant numbers of jobs, or making a sizeable investment, can apply for Empire Zone certification, which entitles them to tax breaks and credits for 10 years, Halahan said.

In Dutchess County, most of the action is occurring in solar energy and microelectronics, according to Gordon Rutherford, director of business attraction at the Dutchess County Economic Development Corp. (DCEDC). “We just did two RFIs (request for information) for two solar manufacturers from overseas,” which were interested in the former IBM site in East Fishkill, as well as an adjacent vacant building located on IBM”™s current campus. Rutherford said there”™s a natural progression from the maturing semiconductor industry, which was the original use of the IBM facilities, to solar, since both utilize silicon and both sites contain permitted storage for gases and chemicals, an unusual advantage.

A group of business people in Ulster County is seeking to attract solar startups and manufacturers to the region (see sidebar). Rutherford said the Hudson Valley is an ideal place for such development given its central location in the densely populated Washington-Boston corridor, which will result in “a huge demand” for photovoltaic systems. He noted competition for such companies is fierce.

“We”™re going after high-tech new companies with higher wages,” he said. “The Hudson Valley is branding itself as the Silicon Valley of the East.”

Although “distance is a little bit of an issue,” Anne Conroy, president and CEO of DCEDC, said her office is also “trying to attract corporate headquarters for fire insurance and real estate, although it”™s a very slow development. Some new construction in the office market we think would fit.”

Among the success stories in recent years is the Gap distribution center; Southeastern Containers, which makes beverage bottles, among other things; Laerdale Medical, which manufactures test dummies; and Cervalas, a data center outsourcer that just expanded its existing center to almost 90,000 square feet.

Cervalis, which manages IT for large companies in financial services, health care, airline and manufacturing as well as backup services, moved to Wappingers Falls seven years ago because of the “excellent strategic location,” said Zack Margolis, the company”™s vice president of sales and marketing. Another draw was the site”™s “ample power infrastructure, which is very important for our type of business.” Margolis said the facility employs 35, with people added on a monthly basis. “Another reason we like Dutchess County is that the work force is of good quality and readily available,” he said. “It also has excellent schools. We also see an influx of people from more expensive areas like Westchester or New York City.”

With industrial space going for $6 to $12 a square foot triple net (the tenant pays everything, including tax) and office space from $15 to $25 triple net, Dutchess offers prices half of what companies would pay in Westchester. “However, we haven”™t seen an exodus,” Rutherford said. Companies “want a New York presence.”

On the other hand, the steady influx of residents into the county from points south is having an impact on the commercial side. Top executives who purchase a second home in the area sometimes end up liking the area so much they move their companies up. One example is Paragon Aquatics, a manufacturer of stainless steel parts for pools and diving boards that transferred from its quarters in Pleasantville to a facility in Lagrange after the chief financial officer bought a house in the area, Rutherford said.

He noted that as companies become more productive, the number of jobs they bring in is far lower than in the past. Ten years ago, a new 25,000-square-foot facility resulted in 900 new jobs, more typical today is a 200,000-square-foot property with 40 jobs. “Anyone talking about recruiting companies is happy if it brings in 50 to 100 jobs,” he said.

Irene MacPherson, director of marketing and business at Ulster County Development Corp. (UCDC), said her group works very closely with its Hudson Valley counterpart. “It”™s really marketing a region,” she said. “Folks sitting in Spokane or London don”™t have a predetermination to come to Ulster County.”

Besides TechCity, the main industrial development sites in Ulster County are the Kingston Business Park, the King”™s Highway corridor in Saugerties and the building in Ellenville formerly occupied by Schrade knife manufacturer.